Clean Technology (CT) Investment Tax Credit (ITC)

Glossary of Terms

This is the first edition of the Clean Technology (CT) Investment Tax Credit (ITC): Glossary of Terms and it reflects the Income Tax Act and Income Tax Regulations current as of September 29, 2025.

Relevant definitions from subsection 127.45(1) and 248(1) of the Income Tax Act used in this guide are explained below.

Clean technology investment tax credit of a qualifying taxpayer for a taxation year means

  1. the total of all amounts each of which is the specified percentage of the capital cost to the taxpayer of clean technology property acquired by the taxpayer in the year; and
  2. the total of amounts required by subsection (8) to be added in computing the taxpayer’s clean technology investment tax credit at the end of the year.

Clean technology property means property

  1. situated in Canada (including property described in subparagraph (d)(v) or (xiv) of Class 43.1 in Schedule II to the Income Tax Regulations that is installed in the exclusive economic zone of Canada) and intended for use exclusively in Canada;
  2. that has not been used, or acquired for use or lease, for any purpose whatever before it was acquired by the taxpayer;
  3. that, if it is to be leased by the taxpayer to another person or partnership, is
    1. leased to a qualifying taxpayer or a partnership all the members of which are taxable Canadian corporations, and
    2. leased in the ordinary course of carrying on a business in Canada by the taxpayer whose principal business is selling or servicing property of that type, or whose principal business is leasing property, lending money, purchasing conditional sales contracts, accounts receivable, bills of sale, chattel mortgages or hypothecary claims on movables, bills of exchange or other obligations representing all or part of the sale price of merchandise or services, or any combination thereof; and
  4. that is
    1. equipment used to generate electricity from solar, wind and water energy that is described in subparagraph (d)(ii), (iii.1), (v), (vi) or (xiv) of Class 43.1 in Schedule II to the Income Tax Regulations,
    2. stationary electricity storage equipment that is described in subparagraph (d)(xviii) or (xix) of Class 43.1 in Schedule II to the Income Tax Regulations, but excluding equipment that uses any fossil fuel in operation,
    3. active solar heating equipment, air-source heat pumps and ground-source heat pumps that are described in subparagraph (d)(i) of Class 43.1 in Schedule II to the Income Tax Regulations,
    4. a non-road zero-emission vehicle described in Class 56 in Schedule II to the Income Tax Regulations and charging or refuelling equipment described in subparagraph (d)(xxi) of Class 43.1 in Schedule II to the Income Tax Regulations or subparagraph (b)(ii) of Class 43.2 in Schedule II to the Income Tax Regulations that in each case is used primarily for such vehicles,
    5. equipment used exclusively for the purpose of generating electrical energy or heat energy, or a combination of electrical energy and heat energy, solely from geothermal energy, that is described in subparagraph (d)(vii) of Class 43.1 in Schedule II to the Income Tax Regulations, but excluding any equipment that is part of a system that extracts fossil fuel for sale,
    6. concentrated solar energy equipment, or
    7. a small modular nuclear reactor.

Distribution equipment means equipment (other than transmission equipment) used to distribute electrical energy generated by electrical generating equipment.

Fossil fuel means a fuel that is petroleum, natural gas or related hydrocarbons, basic oxygen furnace gas, blast furnace gas, coal, coal gas, coke, coke oven gas, lignite or peat.

Transmission equipment means equipment used to transmit more than 75 per cent of the annual electrical energy generated by electrical generating equipment, but does not include a building.

The following terms are not defined under the ITA and ITR but will assist readers to understand the content.

Motor Control Centre (MCC): A central panel with motor starters, circuit breakers and disconnect switches for control and operation of several electric motors in a plant.

Nacelle: The enclosure covering the gearbox, electrical energy generator and control systems that are mounted on top of the tower of a wind turbine generator.

Photovoltaic: Pertains to the direct conversion of light into electricity.

Photovoltaic Array: An interconnected system of photovoltaic panels that function as a single electricity-producing unit. The panels are assembled as a discrete structure, with common support or mounting.

Photovoltaic Cell: A device that converts light directly into electricity. Photovoltaic cells are the building blocks of a photovoltaic module.

Photovoltaic Module: A number of photovoltaic cells electrically interconnected in either series or parallel and mounted together, usually in a sealed unit of convenient size for shipping, handling and assembling into panels or arrays.

Photovoltaic Panel: A group of modules fastened together and wired in series or parallel. The term “panel” is often used interchangeably with the term “module”.

Primarily/Principally: These terms generally refer to more than 50 percent.

Roundtrip Efficiency: The electrical energy output from an electrical energy storage system divided by the electrical energy input into the system, expressed as a percentage, and inclusive of all system losses and electrical inefficiencies involved in the storage of the energy under normal conditions.

Supervisory Control and Data Acquisition (SCADA): Computer control systems that monitor and control entire industrial processes or complexes of systems spread over large areas.

All or substantially all: Generally means greater than or equal to 90 percent.

 
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